Borrowers enter into loan agreements with lending institutions to make a wide variety of purchases. For example, a home purchaser enters into a mortgage loan to finance the home, and an automobile purchaser enters into an automobile loan to finance the purchase of the automobile. Lending institutions enter into loan agreements to make a profit. The profit that the lender makes is derived from finance charges or interest that the borrower pays to the lender in exchange for the right to use the loaned money to make a purchase.
Thus, from the borrower's point of view, the interest paid to the lender is a loss that the borrower must incur in order to make a non-cash purchase. This interest can be a heavy burden on the borrower, especially on long-term loans, such as 20-30 year mortgages. Therefore, borrowers would benefit from an extra source of income to aid in paying the interest on the loan.
Of course, the lender desires to loan as much money as possible while maintaining a security interest in the loaned funds. Typically, the amount of money that a lender can loan is limited by the borrower's income. Thus, if the borrower's income were increased, the lender could benefit by being able to loan more money to the borrower.